There are days when it seems like eCommerce is taking over the payments world. Admittedly, I’m biased as I work for the eCommerce arm of Vantiv. But with news like the following it’s hard not to be seriously impressed:

Alibaba sells $14.3 billion in goods on ‘Singles Day’

Cyber Monday 2015 sales top $3 billion, up 16% from 2014

Wayfair grows from $380 million in revenue in 2010 to $2.25 billion in 2015

Netflix revenues more than double from $3.2B in 2011 to $6.8B in 2015

Dollar Shave Club valued at $615M after their first three years in business.#_msocom_2

With success stories like these and new developments almost daily, eCommerce is arguably the most exciting place to be in the payments ecosphere.

So… why? Why is eCommerce growing so rapidly? Certainly there’s the fact that it’s incredibly convenient for us to use our multitude devices and near-constant connectedness to make an increasing number of our daily, weekly and monthly purchases. Another key factor is the subscription/recurring revenue business model that’s driving massive influxes of venture capital and is rapidly being adopted in segments and industries where you might never have expected it.

Subscribing to services and buying products on installment plans isn’t new. One of the greatest innovations of the early 20th century was the introduction of “lay-away” payments during the Great Depression, which opened the doors for the average (at that time, struggling) American to buy higher ticket items – such as the Model T – in installments. Subscription billing also has a long history, used for decades in industries like publishing and utilities (“bill-pay”).

In recent years recurring billing has been applied for “20th century” services such as web hosting, digital media, social networking, and B2B services. The business model continues to break out of its mold: for example, in the past 3-5 years we’ve seen a rush by non-profit organizations to attract “sustaining donors” it’s clearly the new preferred “ask” for charitable gifts. Perhaps the most innovative application is the “subscription retail” category, where merchants who have traditionally sold hard goods products on a “single-pay” basis are now selling them via subscription plans. More about that in a bit…

So why is the subscription business model so attractive? Why do venture capitalists value businesses using it at 10x that of non-recurring businesses? The bottom line is that it delivers more value, both to the consumer and to the merchant. For consumers subscription billing delivers:

Budget predictability

Affordability of larger ticket items since payments can be spread over longer time period

Convenience, as you don’t have to make incremental purchases of frequently used products.

For merchants recurring billing offers:

Predictable revenue streams

Opportunity to extend and enhance customer relationships

Ability to reach broader demographic (affordability)

Inventory management, as it’s easier to forecast the demand for raw materials.

With the high cost of customer acquisition, a business model that enables merchants to increase customer lifetime value yields higher profits and a better return on investment.

Internet Retailers as well as omni-channel merchants are jumping on board. Big name retailers including Sephora, Starbucks, Macy’s, and Adidas have launched “subscription boxes” with monthly shipments of beauty supplies, coffee, apparel, and shoes.#_msocom_3They#_msocom_4 join more several thousand smaller companies that have been disrupting markets and upending our buying patterns for the past five years or so.

At Vantiv eCommerce we’re helping some of the leading and most innovative subscription box merchants achieve astounding growth. Here’s a sampling:

The applications of the subscription retail model and the growth and daily changes in eCommerce are thrilling to watch (and facilitate). Check out Vantiv eCommerce to see what we can do for your business!

Vantiv had the opportunity to participate as a sponsor for HackPSU at Penn State University, in which 500+ student hackers of all ages competed against each other. Before the event officially kicked off on Saturday April 9, 2016, we had the opportunity to speak with several Electrical Engineering and Computer Sciences students about who Vantiv is and the exciting challenges technology helps solve in the payment ecosystem.

After the excitement from the previous night about the potential talent participating at HackPSU, we could hardly wait to get set up and polish our challenge pitch for those students willing to brave payments. Soon, students began to filter in and their curiosity to learn more about payments became evident as our team intertwined their everyday activities and interests with payments.

Once the teams were strategically formed and their challenge staked, their work began. From the beginning, BarTab set their sights on integrating to Vantiv’s API to solve the common inconveniences of non-sobriety and bar tabs. Their inspiration came from the dreaded morning after when you realize your tab was left open and your card is at a bar you can’t remember. With several Vantiv stress balls and energy drinks, the team developed a mobile app that syncs with a POS to let customers order drinks and pay using a token from the card on file; the catch is through geo-location, the customer’s tab automatically closes if they leave the bar.

Another team that drew inspiration from our API was MediatR. Their personal frustrations also inspired them to try and make payments smarter, faster and easier. Their ploy was to reduce fraud through geo-location matching of the cardholder and the purchase.

After a long grueling 24 hours, the winning team prevailed with a tightly sealed presentation that wowed the crowd.PulsePay took payment security and technology innovation to another level! Taking their inspiration from Shawn McCarthy’s keynote, the team set out to make eCommerce shopping convenient and secure by enabling biometric heart monitoring through a simple wristband made by Nymi. Their design allows the cardholder to biometrically authenticate once with the Nymi Band, and interact securely via online transactions. Merchants supporting PulsePay can process payments with little concern for fraud because the website syncs during checkout with the Nymi Band, and authenticates their heart rate to the user profile created on their mobile application.

As you might imagine, it was incredibly hard to judge the many ideas that emerged during HackPSU. Given the high number of great applications and the amazing list of participants, I was only able to list a few here.

We would like to congratulate PulsePay and all the PSU student teams for helping define the future of payments with the Vantiv platform.

It’s been a great weekend, and we look forward to many more in the future.

EMV chip card transactions moved to the forefront of payments conversations even before last fall’s fraud chargeback liability shift. But many SMB merchants have overlooked the other payment type most EMV terminals enable– Near Field Communication (NFC) contactless “tap-and-pay” payments.

While EMV adoption has been slower than expected, with only 37 percent of U.S. merchant locations EMV ready four months after the liability shift, the number of consumers making tap-and-pay mobile payments is expected to rise 62 percent in 2016. As mobile payments continue to gain ground among consumers, developers can capitalize on the fact that EMV enabled technology also opens the door to tap-and-pay transactions.

One of the biggest use cases for implementing tap-and-pay functionality is speed. Chip card “dip” transactions tend to take longer than traditional mag-stripe card swipe transactions. Additionally, the EMV learning curve for both merchants and consumers is creating frustrating delays at checkout– a recent survey found that nearly one in five chip card users think EMV transactions take too long.

In contrast, tap-and-pay transactions like Apple Pay take just a few seconds. And many younger consumers who are accustomed to using their mobile phones to manage nearly every facet of their lives are already comfortable with the idea of using their phone to make payments. A recent survey by Vantiv and Socratic Technology revealed that Millennials (46%) and GenXers (41%) are the heaviest and most frequent users of mobile payments.

Tap-and-pay also opens the door for developers to provide additional consumer convenience by facilitating sales anywhere, anytime. Creating an environment where a mobile wallet is accepted across all channels, both instore with tap-and-pay or via in-app payments, helps a merchant extend their brand and build customer loyalty.

Again, Millennials are the group most likely to appreciate this type of shopping experience by using their mobile devices in conjunction with in-store experiences. Results from Vantiv’s 2015 Consumer Survey showed that 54 percent of Millennials use their mobile devices to retrieve coupons/deals, 48 percent to check prices, 43 percent to make purchases, and 40 percent to review loyalty points.

Security is also a big selling factor for tap-and-pay. EMV chip cards come enabled with an embedded chip that packs in strong security features beyond the capabilities of traditional magstripe cards. It’s important to note, however, that these extra security features aren't fully applicable when shopping online.

While consumers can pick and choose from multiple payment options, NFC technology has a single standard for developers, creating consistency across various platforms. With offerings from Apple, Google, Samsung, and PayPal, developers should be considering where the market is moving. Since their phones and technology are already in the majority of consumers’ hands, Apple Pay and Android Pay are poised to continue to lead the pack of mobile payment options. Whatever mobile wallet ends up on top, NFC will remain the behind-the-scenes technology powering it.

Looking ahead, the next big opportunity for developers lies in supporting digitizing of gift and loyalty cards, coupons and offers, inserting these into mobile wallets, and presenting them over NFC. Vantiv is currently working with Google and Apple to make sure that the next generation of EMV/NFC hardware will support these emerging technologies. As a developer, if you haven’t yet enabled EMV/NFC into your offering, you risk losing merchants that are trending toward payment solutions that are supported by these technologies.

The over-arching advantage of tap-and-pay functionality is enabling merchant and customer convenience through speed, security, and loyalty building features that span all sales channels. Developers that identify the most promising merchant groups (like the aforementioned industries that rely more heavily on timely delivery of goods and services) and highlight tap-and-pay as a value-add, are likely to experience greater success in the marketplace.

Vantiv offers semi-integrated EMV products that are NFC enabled, and welcomes the opportunity to discuss your integration needs for tap-and-pay functionality. Contact us to learn more, and stay tuned for more on this topic.